Advantages to setting up corporation/LLC in U.S. ?

Currently I have made a few thousand via IM techniques. I am about to apply to several CPA networks and get into the CPA realm. I just started a "company website" What are the advantages to setting up as a corporation (I plan to get a business banking account as well from Chase, or possibly National City) or a LLC? I am in America and I am currently the only one who works, but I may employ two or three people in the near future.

Anyone that could offer any guidance or assistance or direction would be of great help because I am totally lost...

Corporations and LLC shield you from personal losses such as your house etc that is not in the company name. It does not shield you from criminal fraud Taxes are a whole other story. What I do find though is:

1. Don't use your corporate credit for personal shit
2. Pay your MF payroll taxes if you employ people or 1099 them
3. Don't F with the IRS
4. Make sure you get an EIN # from the IRS

The bank will want to see your Articles of Incorporation or LLC
and that EIN # to open an account

By the way unless your credit report sucks .. it is real easy to get a
VISA or MC to the tune of $ 5000 limit .. they usually come pre-approved as
soon as you form the corporation (public records in most states)

Lots on the net about the differences .... usually LLC cost more
I did a type S-Corp to avoid double taxation

(I can't post URLs yet, I am 1 away from the needed 15 posts, so just add the domain name (BHW) to the beginning of the URL)

You really need to see that thread by Uptownbulker, and I look at his webpage, it's a great resource of information. I have never worked with him, but you I will be doing so as soon as I am ready to incorporate.

Currently I have made a few thousand via IM techniques. I am about to apply to several CPA networks and get into the CPA realm. I just started a "company website" What are the advantages to setting up as a corporation (I plan to get a business banking account as well from Chase, or possibly National City) or a LLC? I am in America and I am currently the only one who works, but I may employ two or three people in the near future.

Anyone that could offer any guidance or assistance or direction would be of great help because I am totally lost...

One other quick note: if you don't want to deal with the hassle of setting up a corporation and deal with all the paperwork, try CompanyCorporation. They have a real simple service, you can set it up online in about 10 minutes. In a few weeks, they'll mail you the Articles of Incorp. and Bylaws, and you're set.

I am looking at UptownBulker's services but I don't think I will be using that because it is a little much for me and it looks like it would benefit you more if you were going to set up a corporation outside of the U.S. and I am in there so I shouldn't have any problems there.

As far as LLC and corporation, they both offer protection against personal liability. I believe the main different is taxation, in that LLC's - profits are considered part of your income, which may or may not be beneficial. Here's a resource: hxxp://www.powerhomebiz.com/vol136/structure.htm . (BTW- C Corp is also an option)

And here is a table with the differences: hxxp://www.themoneyalert.com/Corp-Entity-Table.html .

My very brief summation of the tax attributes of the various legal entity forms of doing business is as follows:

Sole proprietorship: All income is reported on schedule C of your personal return. Net business income is also subject to 15.3% self-employment tax (with ceiling limitations).

LLC: Separate legal entity. For federal tax purposes, it is treated as a sole proprietorship if it has one owner or a partnership if it has more than one owner. An election can be made to be taxed as a C corp or as a S corp rather than as a sole proprietorship or partnership. State taxation varies among states.

Corporation: Separate legal entity recognized for tax purposes. Generally corporations are referred to as C corps unless an S corp election is made. With a C corp, taxes are paid at the corporate level on their net income. Corporations can deduct salaries and wages paid from their income (You report your personal salaries/wages as income on your personal return). Corporations pay 7.65% FICA taxes and withhold an additional 7.65% FICA taxes on salaries/wages paid (subject to ceilings). Any additional monies/property paid to you (in excess of salary/wages) will be taxed to you personally as dividends (double taxation) provided the C corp has accumulated earnings and profits.

C corps and LLCs that elect to be treated as S corps generally avoid this double taxation at the personal level on dividend payments, since S corps (as well as partnerships) are considered "flow thru" entities for tax purposes. Therefore, a shareholder or member's individual tax return will show his respective share of the net income of the business and the salaries/wages paid to him. Note: not all states recognize S corp status for state tax purposes.

One advantage of S corp status (for either electing C corps or LLC's) is the ability to avoid excessive self-employment or FICA taxes. As long as you are paying yourself a "reasonable" wage or salary, any remaining income distributions are not subject to SE or FICA taxes.

It may, in some situations, be preferable to be taxed as a C corp. Talking in general terms, this may occur when you plan on reinvesting corporate profits in the business rather that taking them out as dividends. In such case (depending on the income levels) you may be able to take advantage of the lower C corp tax rates.

Hi,
Be very careful about setting up a corp. Once you do, other added burdens come into play. If you're making a few thousands and below the radar, please keep it going. Some states have minimum taxation for corp. Your govt. paperwork requirement can be a pain. While corps. can offer some legal protection, most lawyers will tell you that as long as you call the shots your ass is on the line.
Corps can hide your total identity if done right. Now if you have a physical location then corp. should be considered. But please forget the illusion of legal protection offered by corps. because as the principal owner you will be included in any lawsuit.
Online is fast growing and exciting. Keep the thousands growing and don't burden yourself with unwanted govt. regulations by going corp.

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